Trump’s America exits the global trade order

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"Reciprocal" tariffs announced | Ending de minimis treatment for packages from China | Tariffs on automobiles and auto parts | Tariffs on economies importing Venezuelan oil | Responses from trading partners | Congress’s response

"Reciprocal" tariffs announced

After tariffs were announced on April 2, the New York Times tells us what to know about Trump’s new tariffs, and the Financial Times finds that economists are baffled by Trump’s tariff formula. The Council on Foreign Relations reacts to "liberation day". Peter Ungphakorn in the Trade ß Blog teaches the lessons of the Kindleberger spiral and the Wall Street Journal explains why the US dollar is devaluing. Deborah Elms of the Hinrich Foundation breaks down what’s truly unfair in the impact of Trump’s reciprocal tariffs.

Mentioned publications

1. Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits – Executive Order, The White House, April 2, 2025
   President Trump’s latest executive order establishes a sweeping reciprocal tariff regime aimed at correcting persistent US trade deficits. It directs the US to impose tariffs on imports that mirror the trade barriers of partner countries, particularly targeting sectors like autos, semiconductors, and pharmaceuticals. It seeks to push foreign governments to lower their tariffs and non-tariff barriers.
2. What to Know About Trump’s New Tariffs – Anna Swanson, The New York Times, April 3, 2025
   President Trump’s sweeping tariff overhaul introduces a 10% baseline duty on nearly all imports and additional "reciprocal" tariffs ranging from 1% to 40%, calculated based on trade deficits rather than actual trade barriers. Major trading partners such as China, Japan, South Korea, and Vietnam are heavily impacted. While the administration touts it as a path to economic revival, economists warn it could raise consumer prices – costing the average American household an additional US$2,100 annually – disrupt global supply chains, and risk pushing the US toward economic contraction.
3. HF sponsored accessDonald Trump baffles economists with tariff formula – Peter Foster and Sam Fleming, Financial Times, April 3, 2025
   Economists have slammed President Trump’s new reciprocal tariff formula as economically flawed, warning it punishes poorer countries and won’t eliminate trade deficits. By basing tariffs solely on trade imbalances, the policy is expected to raise prices for US consumers and reduce export competitiveness while failing to address the structural drivers of America’s trade gap. Critics argue the approach is both misguided and economically damaging.
4. Liberation and Its Discontents – Council on Foreign Relations, April 4, 2025
   President Trump’s new tariff regime marks a historic departure from decades of US trade policy. The administration justified the tariffs by treating trade deficits as a proxy for unfair practices, abandoning principles grounded in reciprocal negotiation and comparative advantage. The move has triggered global market turmoil, sparked retaliation from key partners like China, and raised serious legal and economic concerns. Critics argue it could drive up consumer prices, risk a recession, and damage US global economic leadership. The unilateral move undermines the rules-based global trade order, isolates the US, and creates broader geopolitical risks.
5. Tariffs: Kindleberger spiral back from the dead, and who pays the tariffs? - Peter Ungphakorn, Trade ß Blog, April 3, 2025
   Trump’s "reciprocal tariffs" are based not on matching trade barriers but on the size of US trade deficits with each country, leading to high tariffs that disproportionately impact poorer nations and violate WTO principles such as non-discrimination and preferential treatment for developing countries. The WTO warns these measures could shrink global merchandise volumes by around 1% and spark a new wave of retaliatory protectionism. Economists argue that the approach is economically flawed, with trade partners and supply chains likely to suffer widespread disruption.
6. Trump’s Tariffs Were Supposed to Boost the Dollar. Why the Opposite Happened. – Jon Sindreu, The Wall Street Journal, April 3, 2025
   Trump’s "Liberation Day" tariffs have significantly weakened the US dollar, signaling eroding investor confidence in America’s long-term economic outlook. The erratic and economically flawed policies risk undermining US competitiveness, potentially stunting innovation and investment, and prompting foreign capital to shift away from US assets. Blanket tariffs on auto parts could make US car production less efficient, risking isolation rather than integration in global supply chains.
7. What’s really unfair in the impact of Trump’s reciprocal tariffs – Deborah Elms, Hinrich Foundation. April 4, 2025
   President Trump unveiled his long-promised list of sweeping new worldwide reciprocal tariffs in an outdoor ceremony at the White House on April 2. Every single country was assigned a new tariff rate, starting at 10% for all and rising as high as 50% on many economies, with particular damage to smaller, developing economies. This staggering act of self-harm by and to the United States immediately triggered market meltdowns and deep anxiety domestically and across US trade partners.

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Ending de minimis treatment for packages from China

The New York Times writes that Trump’s elimination of the de minimis exception for China and Hong Kong will upend e-commerce. Hinrich Foundation Chairman Merle Hinrich advises to protect de minimis through reform and equal treatment, not through tariffs.

Mentioned publications

1. Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports - Executive Order, The White House, April 2, 2025
   President Trump issued an executive order eliminating the de minimis exemption for low-value imports from China and Hong Kong, effective 2 May 2025. This action subjects these shipments to standard duties, aiming to curb the influx of synthetic opioids into the US by addressing deceptive shipping practices that exploit the previous exemption.
2. Trump’s De Minimis Order Poised to Upend E-Commerce – Danielle Kaye and Peter Eavis, The New York Times, April 3, 2025
   Trump executive order closes the de minimis tariff exemption for low-value goods from China and Hong Kong, aiming to curb fentanyl smuggling and support US manufacturers. While the move may boost tariff revenue, it’s expected to raise consumer prices, strain logistics systems, and hit small retailers reliant on direct imports as they could struggle to absorb the increased costs.
3. Level the playing field now: Protect de minimis not through tariffs, but reform and equal treatment – Merle A. Hinrich, Hinrich Foundation, February 18, 2025
   Over the years, de minimis significantly helped the promotion of global trade, particularly benefiting consumers and small businesses globally. Its benefits are now at risk from proposed tariffs, exploitation, trade tensions, and contraband. Preserving this valuable tool requires a delicate balance to strengthen its original intent, maintain its benefits, address its weaknesses, and ensure its long-term viability.

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Tariffs on automobiles and auto parts

Tariffs announced on autos and auto parts on 26 March also (partially) went into effect last week, throwing the car industry into turmoil, per the Financial Times.

Mentioned publications

1. Adjusting Imports of Automobiles and Automobile Parts into the United States – Proclamation, The White House, March 26, 2025
   On 26 March, Trump administration issued a proclamation imposing a 25% tariff on imported automobiles and certain automobile parts, effective 3 April 2025. This action, under Section 232 of the Trade Expansion Act of 1962, aims to address US national security concerns by boosting the domestic automotive industry, which faces supply chain vulnerabilities and increased foreign competition. The tariffs are intended to encourage domestic production and reduce reliance on foreign imports.
2. HF sponsored accessDonald Trump’s tariffs throw car industry into turmoil – Financial Times, March 28, 2025
   Trump’s sweeping 25% tariff on imported cars and auto parts has sent shockwaves through the global auto industry, with analysts projecting up to US$110 billion in annual costs and steep losses for major carmakers. The tariffs are expected to raise vehicle prices by up to US$10,000, disrupt production, and trigger retaliatory measures, while even US manufacturers reliant on foreign parts brace for significant fallout.

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Tariffs on economies importing Venezuelan oil

Trump orders tariffs on economies that import Venezuelan oil aiming to sever financial support to Nicolás Maduro’s regime, reports the New York Times.

Mentioned publications

1. Imposing Tariffs on Countries Importing Venezuelan Oil - Executive Order, The White House, March 24, 2025
   President Trump’s 24 March executive order imposes a 25% tariff on all US imports from countries that directly or indirectly purchase Venezuelan oil, aiming to cut off financial support to Nicolás Maduro’s regime. The order is justified on national security grounds, citing Venezuela’s support for transnational crime, erosion of democratic institutions, and its role in fueling regional instability.
2. Trump to Impose Tariffs Against Countries That Buy Venezuelan Oil – Ana Swanson, Rebecca F. Elliott, and Alan Rappeport, The New York Times, March 25, 2025
   Donald Trump signed an executive order imposing 25% tariffs on all imports from countries that buy Venezuelan oil, aiming to sever financial support to Nicolás Maduro’s regime, which he deems a national security threat. Framed as a "secondary tariff" strategy, the move reflects a broader shift away from traditional financial sanctions to tariffs as a means of enforcement, concerned that overusing sanctions may harm the global dominance of the US dollar.

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Responses from trading partners

Time magazine catalogues responses to Trump’s tariffs from around the world. Trivium China evaluates China’s retaliation. CSIS consider the impact of "liberation day" on China. Nikkei Asia reports on the alarming implications of auto tariffs for Japan.

Mentioned publications

1. ‘Inflation Day Rather Than Liberation Day’: How the World Is Reacting to Trump’s Latest Tariffs – Miranda Jeyaretnam and Chad de Guzman, Time, April 4, 2025
   Trump announced sweeping "reciprocal" tariffs on imports from nearly every economy in a move expected to jolt the US economy and disrupt global trade. Several world leaders have already pushed back, with tariffs ranging from 10% to as high as 50% for the hardest-hit nations. Some are promising swift retaliation, raising the risk of a more insular global economy, while others are seeking negotiations to avoid a full-blown trade war. Time compiles an economy-by-economy list of responses to Trump’s tariffs.
2. To escalate or not to escalate: the weekly recap – Andrew Polk, Trivium China, April 6, 2025
   China swiftly retaliated against the US's latest tariff hike by imposing a blanket 34% tariff on all American imports and expanding export controls on key rare earth elements. It also launched regulatory actions targeting US firms, signaling a firm but measured escalation. While Beijing left room for negotiation, tensions remain high with no clear path to de-escalation.
3. China and the Impact of "Liberation Day" Tariffs – Scott Kennedy, Ilaria Mazzocco, and Ryan Featherston, Center for Strategic and International Studies, April 4, 2025
   Trump’s sweeping 34% tariffs on Chinese imports mark a sharp escalation in US-China trade tensions, triggering immediate retaliation from Beijing and threatening further economic disruption. The tariffs could shave up to 2.4% off China’s GDP in 2025, while also straining global supply chains and clean energy ambitions. With more trade measures looming, the path forward hinges on whether Trump and Xi choose confrontation or conversation.
4. Trump tariffs prompt Japan to consider 'all options' – Nikkei Asia, March 27, 2025
   President Trump’s 25% tariff on imported cars and parts has rattled Japan, undercutting a 2019 bilateral trade agreement and threatening its top export sector. Japanese and South Korean automakers face sharp profit hits, while industry leaders on both sides warn the move could drive up US car prices, disrupt supply chains, and cost manufacturing jobs.

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Congress’s response

Politico reports on a vote in the Senate to reject Canada tariffs and a bipartisan effort to reassert Congress’ tariff authority.

Mentioned publications

1. Senate Republicans buck Trump, join Dems in rejecting Canada tariffs – Lisa Kashinsky, Daniel Desrochers and Samuel Benson, Politico, April 2, 2025
   In a rare show of defiance, four Senate Republicans joined Democrats to reject President Trump’s use of emergency powers to impose steep tariffs on Canadian imports, signaling growing concern over the economic fallout of his aggressive trade agenda. While largely symbolic, the rebuke highlights fractures within Republican ranks as Trump escalates his global tariff campaign.

2. Top Republican leads bill to reassert Congress’ tariff power amid Trump trade war - Ben Leonard, Politico, April 3, 2025
   Senators Chuck Grassley and Maria Cantwell have introduced bipartisan legislation to curb President Trump’s tariff powers, requiring congressional approval for new duties within 60 days. Though unlikely to pass, the move signals growing unease within the Republican Party over Trump’s aggressive trade agenda and reflects renewed calls for Congress to reassert its constitutional role in trade policy.

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